What is Ethereum (ETH)?
The Ethereum blockchain was first detailed in a whitepaper published in 2013 by Vitalik Buterin. Designed primarily to run code across a decentralized computing platform, the cryptocurrency Ether is capable of transferring value like Bitcoin. But it is also capable of leveraging the distributed processing power of its open platform to execute Smart Contracts.
Since Ether operates in a distributed manner, the decentralized applications (dApps) that are run are at no risk of human tampering. They’re added to Ethereum’s blockchain, and can be designed so that the code is permanent and unchangeable. Transparency is a major benefit here – the blockchain is publicly visible and easy to explore, so any user participating in the market can verify the code before ever interacting with it.
A New Internet for a New World
The concept of a new, Ether-powered internet that is infused with decentralized finance (DeFi) and digital currency has been gaining more and more attention around the globe, and is it really any surprise?
The Ethereum blockchain provides not just a way to resist the censorship that plagues traditional internet applications, but also gives developers the means to actually create or generate real-world value.
How Does Ethereum Work?
Ethereum essentially works as if it were a massive, decentralized state machine. This means that at any time, you can get a snapshot of every single address (account) on the Ethereum blockchain and determine its current state. Actions happening throughout the blockchain cause states to change, and every node updates its snapshot to reflect these changes.
Each state Ethereum transitions to is the result of millions of transactions. These transactions are grouped into what are called “blocks.” Think of a block as a large batch of transactions, and each block is chained together with its previous block – creating what we know as the blockchain.
Building the Future with Blocks and Chains
The actual process of updating the state of the platform and committing these batches of transactions is known as Mining. Ethereum blocks are mined through the Proof of Work algorithm, much like Bitcoin’s – for now. A complete overhaul of Ethereum’s mechanics (ETH2.0) is in development and soon the crypto platform will transition to a Proof of Stake algorithm, along with other upgrades.
Smart Contracts running on Ethereum are triggered by transactions. When someone interacts with a contract, each node executes the contract’s code while recording the output. This is made possible by the Ethereum Virtual Machine (EVM), which translates the smart contracts in a way that the computers connected can understand.
What are Smart Contracts?
At its core, a smart contract is executable computer code. Though the code itself is neither “smart” nor a “contract” in the traditional sense, we view it as smart because it can react to triggers or conditions – and it can be thought of as a contract due to its ability to execute agreements between multiple parties.
Famed computer scientist Nick Szabo is credited with outlining the concept of smart contracts in the 1990s. An example he used compared basic smart contracts to the way a traditional vending machine operates – a user inserts a coin, selects an item, and the machine delivers it.
Supercharged Digital Vending Machines?
Taking the vending machine logic and applying it to the realm of the digital, developers are able to specify any action to be taken when a user sends a specified amount of the cryptocurrency Ether to the contract.
Developers code these contracts in a way that the EVM can read, and subsequently push, to the computers that are operating nodes on the platform. The contract is published in a way that makes it immune to censorship and cannot be deleted unless the developer sets specific conditions in the code to do so.
Calculate the price.
Who Are the Founders of Ethereum?
Ethereum was co-founded by 8 developers hailing from across the globe. They first met and joined forces on June 7, 2014, in Zug, Switzerland.
Russian-Canadian Vitalik Buterin is the most well-known developer, becoming a celebrity in his own right. The author of the original 2013 Ethereum whitepaper, Vitalik has remained an active contributor to Ethereum’s development and still works on improving the platform to this day.
Gavin Wood, a British developer, is arguably the second most renowned co-founder of ETH. Having coded the very first iteration of Ethereum in the C++ programming language, conceptualizing the Solidity programming language (now the core development language of Ethereum), and operating as the first CTO of the Ethereum Foundation, Gavin has been an integral part of the evolution of Ethereum.
The other co-founders of Ethereum all played their own important parts in making it what it is today:
Mihai Alisie: helped to establish the Ethereum Foundation.
Amir Chetrit: helped co-found Ethereum but stepped away early on.
Anthony Di Iorio: project underwriter during the early stages of development.
Charles Hoskinson: essentially responsible for establishing the Ethereum Foundation and its legal framework.
Joseph Lubin: helped fund the early development of Ethereum and founded the ETH incubator ConsenSys.
Jeffrey Wilcke: supported initial development using the Go programming language.
What Makes Ethereum Unique?
Ethereum took some of the concepts initially laid out by Bitcoin and created a powerful open source blockchain smart contract platform. The platform is capable of moving and storing value, just like Bitcoin, but the primary draw is the network’s ability to essentially function as a brand-new, decentralized internet – complete with its own applications.
This is Ethereum’s primary innovation – the ability to execute smart contracts using the blockchain, reinforcing the existing benefits of smart contract technology. Ethereum’s blockchain was designed essentially to be “one computer for the entire planet,” in the words of Gavin Wood.
In theory, Ether is able to make any application more robust, censorship-resistant, and secure – accomplished by running it on a globally distributed system of public nodes.
Tokens for All Occasions
In addition to smart contracts, the Ethereum blockchain is able to host other cryptocurrencies, called “tokens”. The ERC-20 token standard allows developers to create entirely new currencies, backed by the power of Ethereum.
Consider yourself a fan of NFTs? The ERC-721 and more streamlined ERC-1155 token standards are what make this new asset class a reality, and Ethereum provides the power and security to make it all happen.
What Gives Ethereum Value?
Ethereum derives its value from its utility rather than its limited supply (like Bitcoin). Its ability to act as a platform for various decentralized projects and applications increases its value exponentially.
How Many Ethereum (ETH) Coins Are in Circulation?
When Ethereum launched, it did so with an initial supply of 72,000,000 ETH. Over 50,000,000 of these were distributed in a public token sale – known as an Initial Coin Offering (ICO), where those wishing to participate could purchase ETH in exchange for BTC(Bitcoin) or fiat currency (such as USD).
Fast forward to the summer of 2020.
At this time, there were around 112 million Ether (ETH) in circulation – 72 million from the initial supply and around 40 million of the digital currency having been mined from transactions and healthy open-network activity.
These mined ETH are distributed to the miners who power it all (in addition to gas fees), with the rewards following a deflationary scale as time goes on. The original reward in 2015 was 5 ETH per block, which later went down to 3 ETH in late 2017 and then to 2 ETH in early 2019. The typical time to mine an Ethereum block is around 13-15 seconds, and the miner’s real-time profitability is directly related to the price of the crypto.
How Does Bitcoin Compare?
A major difference between Bitcoin and Ethereum is that ETH is not deflationary. While Bitcoin has a hard limit set in its code that will only ever allow 21 million BTC to be mined, ETH does not have a cap on the total supply and continues to grow year after year.
Though there are conflicting beliefs on this and some have proposed implementing a supply cap, Ethereum’s developers justify the current system by not wanting to have a “fixed security budget”. Being able to adjust ETH’s issuance rate via consensus allows Ethereum’s market to maintain its security without a hard cap on supply.
How Is the Ethereum Network Secured?
Ethereum is currently secured via Proof of Work(PoW), the tried-and-true but arguably inefficient method pioneered by Bitcoin. Ethereum, however, is using a custom open source algorithm designed specifically for it, dubbed Ethash.
Though Ethash provides a more effective PoW mechanism for Ethereum, the network is in the midst of transitioning to a Proof of Stake(PoS) algorithm as part of the major Ethereum 2.0 update, a multi-stage rollout which started in December 2020.
How To Use Ethereum
Ethereum provides an enormous amount of utility to the crypto sector simply by offering its blockchain as a platform to build other projects on. Its ability to host other projects has proven more than valuable, as its current ecosystem includes DeFi giants such as ChainLink, Uniswap, Wrapped Bitcoin, DAI, etc.
Ether, on the other hand, isn’t widely used as a means of payment due to the high transaction fees and low processing speed.
What Is ETH 2.0?
Ethereum 2.0, also known as ETH 2.0 or codename “Serenity”, is a massive, multi-part upgrade to the existing Ethereum blockchain. The features baked into ETH 2.0 are designed entirely to enhance the speed, efficiency, and scalability of the Ethereum network.
The end goal is to bolster the network to a point where it can process more transactions at an exponentially faster rate, thus solving the current issues with erratic and cost-restrictive fees that many Ethereum-based projects and their users face.
Ethereum 2.0 is rolling out in several phases, with the first upgrade live as of December 2020: Phase 0 – the Beacon Chain.
Ethereum Mining and Staking
After the Beacon Chain went live, it became possible to begin staking on the Ethereum 2.0 network. Staking on Ethereum 2.0 involves sending the ETH you’d like to stake to a deposit smart contract, effectively turning you into a node/miner and securing the network.
Ethereum staking rewards are distributed according to a curve, influenced by both the participation and average percent of stakers; most early ETH 2.0 staking rewards are set at 20% for early stakers, but will gradually be lowered until it is between 7% and 4.5% annually for the foreseeable future.
A Stake in the New Internet
The minimum requirement for a user to run their own Ethereum node is a stake of 32 ETH. Staking in Ethereum 2.0 means that your ETH stake will be locked in the network for an estimated 2 years until Phase 2 of the Ethereum 2.0 upgrade is completed (expected to be done in 2022).
Another option for users not willing or able to stake 32 ETH (nearly $58,000 at time of writing) is staking pools. A staking pool is a 3rd-party service that allows users to stake what they can, and then earn rewards proportionally to their stake. This offers far more flexibility for the average user.
Further down the road, we can look forward to the following phases of the ETH 2.0 upgrade:
- Phase 1 – Shard Chains: shard chains, or sharding, is implemented to the ETH 2.0 network, giving the network a scaling solution designed to enable instant, cheap transactions like never before. Estimated 2021 release.
- Phase 2 – The Docking: the Ethereum Mainnet merges with the Beacon Chain, enabling PoS and shard chains across the entire network and signalling the end of PoW on Ethereum. Estimated 2022 release.
It’s clear that Ethereum is fulfilling a massive need that is becoming more and more apparent each day – the need for a new, open source internet that is free from censorship and manipulation.
The cryptocurrency Ether benefits from a platform that is packed with features designed to enable decentralized finance as an integral piece of this new internet, along with the ability to run applications and host entirely new projects.
Ethereum is in the midst of overhauling the way it operates. The network will gradually scale up over the next couple of years, while retaining the aspects of decentralization we all know and love.
Is Ethereum a currency?
Ethereum’s design is not suited to be a currency, but rather a platform for building decentralized applications.
Does Ethereum have competitors?
Ethereum currently faces competition mainly from Binance Smart Chain, Cardano, and Polkadot.
How to buy Ethereum (ETH)
Are you ready to be a part of the Ethereum network? Buying ETH is as easy as visiting the Kriptomat buy Ethereum page and choosing a method of payment.
How to sell Ethereum (ETH)
If you already own Ether and hold it on a Kriptomat exchange wallet, you can easily sell it by navigating the interface and choosing your desired payment option.
The current Ethereum price is EUR.
The 24-hour trading volume of Ethereum is EUR. Ethereum is currently ranked by total market capitalization, with a market cap of EUR. It has a circulating supply of ETH/Ether and the max. supply currently has no limit.
Your Crypto Adventure Awaits
We’ve made it as easy and exciting as possible to jump in and purchase ETH. Our team is committed to offering the best products on the market to buy, sell and to be aware of the ETH price, having taken everything we learned in 2020 about currency and crypto related products and fine tuning our technology.
Register now to begin your journey into the world of cryptocurrencies with Kriptomat!
If you’re experiencing any issues or have any questions at all, please don’t hesitate to reach our Customer Support Team. We’re always here to help!
Web & mobile app
for crypto on the go.
No matter where you are, Kriptomat is there for you.